Weekly Market Recap

We come from a land down under(employed)

20/09/2021

Week in review

Australian employment declines by 146,300
Australia business confidence improves to -5.3
U.S. CPI inflation for August was 5.3%

Week ahead

U.S. Federal Reserve meeting
RBA minutes of September policy meeting
September preliminary PMIs for U.S and Eurozone

Thought of the week

Another month, another surprise labour market report, this time for Australia. The unemployment rate declined another 0.1%pts in August to 4.5%, the lowest since 2008, despite the 146,300 drop in those classified as being employed. Similar to the recent U.S. experience, the unusual jobs numbers are a function of the supply of labour. Unsurprisingly, lockdowns make job search difficult, and even those that are technically still employed but working zero hours can be classed as no longer being part of the workforce. The result is a decline in the supply of labour, or a falling participation rate, which can lead to a decline in the unemployment rate, even as employment declines. Broader measures of the labour market, such as the underemployment rate, are a better indicator of labour market slack. As restrictions are lifted the participation rate will rise again and the unemployment rate will experience a modest lift in the months ahead.

The underemployment rate better reflects the jobs market

percent

Source: ABS, J.P. Morgan Asset Management. Data reflect most recently available as of 17/09/21.
All returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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